Segments

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

Segments

SEGMENTS

Refinery Operations

Our refinery segment operates for the benefit of the airline segment by providing jet fuel to the airline segment from its own production and through jet fuel obtained through agreements with third parties. The refinery's production consists of jet fuel, as well as non-jet fuel products. We use several counterparties to exchange the non-jet fuel products produced by the refinery for jet fuel consumed in our airline operations. The gross fair value of the products exchanged under these agreements during the three and six months ended June 30, 2021 was $536 million and $1.0 billion, respectively, compared to $65 million and $895 million, respectively, for the three and six months ended June 30, 2020.

Segment Reporting

Segment results are prepared based on our internal accounting methods described below, with reconciliations to consolidated amounts in accordance with GAAP. Our segments are not designed to measure operating income or loss directly related to the products and services included in each segment on a stand-alone basis.

Financial information by segment
(in millions)	Airline		Refinery		Intersegment Sales/Other			Consolidated
Three Months Ended June 30, 2021
Operating revenue:	$	6,349	$	1,434				$	7,126
Sales to airline segment					$	(108)	(1)
Exchanged products					(536)		(2)
Sales of refined products					(13)		(3)
Operating income (loss)	973		(157)		—			816
Interest expense, net	337		1		—			338
Depreciation and amortization	501		24		(24)		(4)	501
Restructuring charges	8		—		—			8
Total assets, end of period	73,484		1,825		—			75,309
Net fair value obligations, end of period(5)	—		(527)		—			(527)
Capital expenditures	752		9		—			761
Three Months Ended June 30, 2020
Operating revenue:	$	1,176	$	513				$	1,468
Sales to airline segment					$	(3)	(1)
Exchanged products					(65)		(2)
Sales of refined products					(153)		(3)
Operating loss	(4,701)		(114)		—			(4,815)
Interest expense (income), net	196		(2)		—			194
Depreciation and amortization	591		25		(25)		(4)	591
Restructuring charges	2,454		—		—			2,454
Total assets, end of period	70,707		1,554		—			72,261
Net fair value obligations, end of period(5)	—		(49)		—			(49)
Capital expenditures	281		1		—			282

(1)Represents transfers, valued on a market price basis, from the refinery to the airline segment for use in airline operations. We determine market price by reference to the market index for the primary delivery location, which is New York Harbor, for jet fuel from the refinery.

(2)Represents value of products delivered under our exchange agreements, as discussed above, determined on a market price basis.

(3)These sales were at or near cost; accordingly, the margin on these sales is de minimis.

(4)Refinery segment operating results, including depreciation and amortization, are included within aircraft fuel and related taxes in our income statement.

(5)The fair values of these obligations, which are related to renewable fuel compliance costs, are based on quoted market prices and other observable information and are classified as Level 2 in the fair value hierarchy. At June 30, 2021 we had a gross fair value obligation of $581 million and related assets of $55 million. At June 30, 2020 we had a gross fair value obligation of $55 million and related assets of $6 million. We expect to use the assets in settling a portion of our obligations.

Financial information by segment
(in millions)	Airline		Refinery		Intersegment Sales/Other			Consolidated
Six Months Ended June 30, 2021
Operating revenue:	$	9,959	$	2,481				$	11,276
Sales to airline segment					$	(108)	(1)
Exchanged products					(1,039)		(2)
Sales of refined products					(17)		(3)
Operating loss	(299)		(283)		—			(582)
Interest expense, net	697		3		—			700
Depreciation and amortization	993		48		(48)		(4)	993
Restructuring charges	(36)		—		—			(36)
Capital expenditures	1,177		22		—			1,199
Six Months Ended June 30, 2020
Operating revenue:	$	9,768	$	1,697				$	10,060
Sales to airline segment					$	(214)	(1)
Exchanged products					(895)		(2)
Sales of refined products					(296)		(3)
Operating loss	(5,140)		(85)		—			(5,225)
Interest expense (income), net	277		(4)		—			273
Depreciation and amortization	1,268		49		(49)		(4)	1,268
Restructuring charges	2,454		—		—			2,454
Capital expenditures	1,206		12		—			1,218

(1)Represents transfers, valued on a market price basis, from the refinery to the airline segment for use in airline operations. We determine market price by reference to the market index for the primary delivery location, which is New York Harbor, for jet fuel from the refinery.

(2)Represents value of products delivered under our exchange agreements, as discussed above, determined on a market price basis.

(3)These sales were at or near cost; accordingly, the margin on these sales is de minimis.

(4)Refinery segment operating results, including depreciation and amortization, are included within aircraft fuel and related taxes in our income statement.